Aero India 2015 will provide an excellent platform to both global and Indian firms in the aerospace and defence industry for exploiting business opportunities
The long awaited tenth edition of the prestigious biennial event Aero India International Airshow to be held at Air Force Station Yelahanka from February 18 to 22, 2015, is finally upon us. The event is organised by the Defence Exhibition Organisation under the Ministry of Defence Production in collaboration with the Indian Air Force (IAF), the Defence Research and Development Organisation (DRDO), Department of Space and the Ministry of Civil Aviation. This year, the Ministry has involved the Confederation of Indian Industry (CII), the Federation of Indian Chambers of Commerce and Industry (FICCI) and for the first time incorporated the PHD Chamber of Commerce and Industry.
Aero India is one of the largest of the airshows in Asia but what makes this particular edition of the airshow special is that it will be inaugurated by Narendra Modi, the Prime Minister of India. This would be a landmark event and a significant departure from the practice in the past as never before has the Prime Minister of India attended the event leave alone inaugurating it. There were unconfirmed reports in the media that the Prime Minister would be flying a sortie in the Rafale. However, this report turned out to be unfounded and has rightly been denied by the government. The Ministry of Defence has also stated that Aero India had no link with any of the acquisition plans on the anvil. The Minister of Defence Manohar Parrikar would attend the show and himself chair a conference on ‘Make in India’. The Minister of Civil Aviation Pusapati Ashok Gajapathi Raju would be a special guest at the airshow.
As compared with the 570 companies consisting of both domestic and foreign that were present at Aero India 2013, in the airshow this year, there are around 623 companies taking part, registering an increase. Of the companies expected to be present at the airshow, there will be 295 Indian and 328 from abroad. The US alone will be fielding 64 companies in all followed by France with 58, the UK with 48 and Russia with 41. Global aerospace majors participating in the tenth edition of Aero India are Boeing, Airbus, Lockheed Martin, BAE Systems, Israel Aerospace Industries, Saab of Sweden and Dassault Aviation. The positive and unbiased approach of the government is evident in the fact that even the Italian conglomerate Finmeccanica, which has come under a shadow in the wake of a major scam in the AgustaWestland VVIP helicopter deal, will be present at the airshow. From the domestic industry, Hindustan Aeronautics Limited (HAL) and the Defence Research and Development Organisation (DRDO) will have a dominating presence. A large number of Indian small and medium enterprises will also be present.
While there were just 46 delegations from overseas during Aero India 2013, this time round, there would be as many as 54 ministerial and high-level delegations from several countries. The list of high profile visitors is expected to include Ministers of Defence and Service Chiefs from five different countries. The exposition will include sectors such as defence manufacturing, airport infrastructure, aerospace, defence and civil aviation. The US-India Business Council (USIBC) Aerospace and Defense Executive Committee will be present at Aero India 2015 to interact with senior American and Indian Government officials visiting the airshow to advance the objectives of the Defence Trade and Technology Initiative (DTTI).
Of particular relevance to the IAF would be the presence of United Instruments Corporation of Russia who will be present at the airshow to showcase advanced developments in aeronautical radio communications. The company will interact with HAL and the IAF a proposal to upgrade the communications equipment of the Su-30MKI fleet and supply of modern communications systems for the Indo-Russian fifth-generation fighter aircraft and the multi-role transport aircraft currently under development.
Notwithstanding the fact that most of the big ticket purchases related to military aviation in India are under procurement have already been negotiated or the final selection made, the enthusiasm in the global aerospace industry has not waned as India presents a market with enormous potential for business in the aerospace and defence sectors. The armed forces of India are the third largest in the world and continue to import over 60 per cent of their requirement of military hardware, the nation dedicating 40 per cent of the defence budget on capital acquisitions alone. The optimism in the industry is buoyed by the fact that India expects to spend Rs. 250 billion on defence acquisition projects in the next seven years.
The Thrust Towards ‘Make in India’
But what appears to have fired the imagination and interest of both the global and domestic aerospace industry is the new thrust by Prime Minister Narendra Modi on ‘Make in India’ in the aerospace defence industry sector. This is further boosted by the positive steps either already taken or are under consideration by the government. These measures include the revision in the upper limit of foreign direct investment (FDI) to 49 per cent in case by case basis from the earlier figure of 26 per cent, opening up opportunities in the defence and aerospace sector to the fledgling aerospace industry in the private sector in India, accepting the necessity of employment of middlemen or agents to facilitate defence deals in India and the move to simplify the Defence Procurement Procedure. There are high hopes in the industry that pro-business approach of the Modi-led government will help turn the tide for India’s manufacturing industry. However, for transfer of technology, that will be a major issue in defence deals in the future, the foreign companies would have been happier if the cap for FDI was raised to 74 per cent.
There are bright prospects for business on the horizon for the small companies in India in the aerospace industry in the private sector as a result of ‘Offset’ obligations that foreign companies have to comply with. As foreign companies that are awarded contracts of Rs. 300 crore and above are required to plough back the stipulated 30 to 50 per cent of the value of the contract into Indian companies largely for the manufacture of components. For example, in a contract worth $10 billion, the foreign vendor will have to invest $3 billion in Indian companies. Foreign companies now have the option to invest the commitment under Offset obligations in sectors other than the defence and aerospace industry which includes civil aviation as well. Participation by a record number of small and medium enterprises drawn by the immense business potential, would eventually help in providing the tight impetus to the ‘Make in India’ campaign. Besides, indications by the government currently in power to make it easier for companies abroad to do business in India has been particularly encouraging for both Indian and foreign entities. The government is also working on removing hurdles to streamline the procedure for research, development related to the production of military hardware.
Static and Flying Display
Perhaps the most fascinating part of the Aero India 2015 will be the display on the ground as well as in the air by a variety of military and civil aircraft. At Aero India 2015, the number of aircraft participating in static and air displays is expected to be around 72. Civil aviation will be projected with 17 types of aircraft. Some of the military aircraft from abroad that are expected to be on display at the show include the F-15C Eagle, Lockheed Martin F-16C, Boeing KC-135, Boeing C-17 Globemaster III, Boeing P-8 Poseidon, the French Rafale and Embraer EMB-145 I. From the Indian side, the indigenous light combat aircraft Tejas Mk I and the Su-30MKI air dominance fighter of the IAF will be on display both on the ground and in the air. Some of the civil aircraft from abroad expected to be at the airshow include the Pilatus PC-12 NG, Falcon 2000 and Falcon 7X from Dassault Aviation, Phenom 100E and EMB 505 from Embraer of Brazil.
Aerobatic display has also been adding a special flavour to the airshow. Unfortunately, the nine aircraft formation aerobatic team of the IAF, the well known Surya Kiran, has been phased out of service and the replacement team with nine Hawk 132 advanced jet trainer Aircraft is yet to be formed. However, the Sarang helicopter display team of the IAF will be there to enthrall the spectators. Apart from the Sarang, there will be few other aerobatic teams to set the sky on fire. The Flying Bulls of the Czech Republic who put up heart-stopping performance during Aero India 2013 will be there at the airshow again this year along with a Scandinavian airshow team from Sweden which will be a new feature this year. A UK-based team Aero Superbatics, which is the world’s only aerobatic formation wing walking team and have been specialists in display flying for over 27 years, will form part of the air display routine. Skydiving by Special Forces of the US will be among the major attractions at Aero India 2015.
Aero India 2015 will provide an excellent platform to both global and Indian firms in the aerospace and defence industry for exploiting business opportunities. Aero India 2015 is expected to be significantly larger than the previous show held two years ago. A resurgent Indian economy, the escalating challenges to national security and major policy changes have given a major fillip to the defence industry in India. It has also become a hub centre for defence business in the Asia region.